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In NBA Lockout, Owners Take Wrong Path To Competitive Balance

Owners have spent much of the NBA lockout pushing for a harder salary cap to improve the league's competitive balance. But the league's proposals decrease teams' margin for error when the more reasonable fix is to expand it.

In addition to pushing for profitability by way of the NBA lockout, David Stern and the owners have pounded on the need for better competitive balance. Stern and his deputy Adam Silver regularly tell the cameras that they need a harder salary cap in order to allow all 30 teams to compete. Stern occasionally mentions the payroll disparity between the L.A. Lakers ($90 million, $110 million if you include luxury tax) and the Sacramento Kings. (This comparison also wormed its way into the excellent Howard Beck's A-1 New York Times story on the lockout.)

Writers more eloquent than I have covered this well-worn territory well. Henry Abbott of TrueHoop broke down the facts and theories surrounding competitive balance in the NBA in a beautifully simplistic way in September. Back in July, Zach Lowe of The Point Forward shared insights from around the sports economics world on why competitive balance wasn't as simple as hardening the salary cap.

The problem with convincing most fans that no, a harder cap and payroll parity won't create NFL-style parity on the hardwood, is that in theory, it makes sense. If you only let the Lakers spend $45 million like the Kings, they'd have to make some difficult roster decisions, near any of which would make them a worse team. One of those players could end up on the Kings, at a salary cheaper than what he'd have made in L.A. Ergo, salary equity becomes a more competitive league!

Unfortunately, it's not as if the Lakers are going to drop Kobe Bryant or Pau Gasol if the league implements a hard cap. And that's what's central to the NBA's on-court imbalance: stars are everything. Without a true-blue star, you can spend all of the money you want, and unless you're the 2004 Detroit Pistons, you're not winning a title. If you don't have two well above-average players, you're not making the NBA playoffs. (This does not apply to the No. 8 seed in the East.) Consider that in the NFL, a team's best player is on the field for the better part of half of every game, depending on time of possession. The best NBA players are on the court 80 percent of the time almost every game, and often more.

You know how a hard cap culling would work? A lot like the expansion draft has worked in the past. The Lakers aren't going to drop Gasol or even Andrew Bynum to edge down under a hard cap: they'll shed Luke Walton, Steve Blake and Matt Barnes. The Dallas Mavericks won't be shy about trying to keep Tyson Chandler: they'll simply amnesty Brendan Haywood. In the long run, after a few free agent cycles, perhaps sanity would start to prevail and a benefit to low-revenue teams will materialize. But until then, a harder cap mixed with other provisions the NBA has proposed will simply help the big spenders contain costs more effectively. It's hardly a competitive balance fix.

As Abbott noted in his piece and as I have written at Sactown Royalty, the Kings didn't necessarily lose because they did not and could not spend what the Lakers did. The Kings didn't spend because they weren't going to win. This was another rebuilding year for the Kings, with a focus on introducing rookie DeMarcus Cousins to the NBA, developing second-year Tyreke Evans, maximizing flexibility heading into a new collective bargaining agreement and trying to build for the future. There's no reason to spend unless that spending was used to grow the asset base. (The Minnesota Timberwolves played this hand last season: David Kahn used the team's cap space to first take on Michael Beasley for basically nothing, then grab Anthony Randolph -- and Eddy Curry -- to help facilitate the Carmelo Anthony trade. In 2008, Sam Presti of the Seattle Sonics helped the Phoenix Suns avoid a massive luxury tax payment by taking on Kurt Thomas at the cost of two draft picks. Kahn didn't want Curry. Presti didn't want Thomas. But they spent some amount of money on them in order to get decent assets.)

No matter if you're broke like the Maloofs or have pockets as deep as the Mariana Trench, it doesn't make sense to spend when you're building unless you're building the asset base. The Lakers held no competitive advantage over the Kings because the Kings weren't legitimately competing against the Lakers. No one expected the Kings to make the playoffs, not even the team's management. It was not a reasonable goal, not a part of the team's timeline. And no part of a hard cap would have helped the Kings compete because no part of a hard cap would mature Evans' game, make Cousins' the type of player who could be a rookie All-Star like readymade destroyer Blake Griffin. The hard cap is not a magic wand.

In fact, the hard cap could make situations like that which the Kings experienced before Evans more difficult to navigate out of. Consider what lies at the center of the league's complaints about salary inequity: some teams can afford to spend their ways out of mistakes, others cannot. Now rephrase it: some teams have a high margin for error, others do not. Now consider what a harder cap does: it decreases the margin for error for those teams like the Mavericks, Lakers and New York Knicks that are able to spend more than many rivals.

With a hard cap, you have a less flexible system. Remember, this isn't the NFL where any player can be waived to free up future cap space. The NBA is not losing guaranteed contracts as a rule. The impact of a hard cap is that teams will be less willing or able to give mid-rung veterans guaranteed millions over multiple years. Guys like Steve Blake and Matt Barnes will be facing a tougher market. The more expensive mistakes like Haywood or Hedo Turkoglu or Gilbert Arenas ... players with bidders and options, players who convince GMs that they can be the difference? Those players are still getting guaranteed contracts, because that's going to be a bargaining priority for their agents. 

With a harder cap, flexibility will decrease as teams are unable to exceed the cap to take on a bad contract in a desperate attempt to win a title. (No Magic trading for Turkoglu and Gil in one weekend, in other words.) Teams that make mistakes will be stuck. You shrink the rich teams' margin for error by making every signing that much more impactful.

That's a terrible recipe for competitive balance.

Instead, if it's truly concerned with competitive balance, the league ought to work to expand the margin for error for its low-wealth teams. Make it easier for teams like the Wolves and Kings to rebuild quickly and make a lunge for the top. How? Shorter contracts -- which the players' union has reportedly consented to in lockout talks -- is the most obvious and important way. Robust revenue sharing that dampens the innate, frankly unearned advantages of large market size some teams have is another solid step toward better increased payroll flexibility and competitive balance. Owners don't want to hear it, but allowing all teams -- not just the team's owned by billionaires -- to survive mistakes is a better competitive balance solution than making it miserable for everyone.

By the way, re-consider the idea that all 32 NFL teams are competing for the Super Bowl every year. The NBA has three teams that haven't made the 16-team playoffs within the past five seasons (Kings, Wolves, Clippers). The NFL, which plays a 12-team playoff bracket, has eight  (Bills, Browns, Broncos, Lions, Texans, Raiders, 49ers, Rams). The NFL postseason is obviously more exclusive, making a playoff berth an imperfect comparison. But it's not as if the NFL is some bastion of total competitive equality. Its teams have long down-cycles, too ... despite a strict hard cap and wondrous payroll parity. Money isn't everything.


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